In today’s litigious society, the pressure is especially high on risk managers to anticipate areas in which professional liability may be a concern and mitigate them properly. A risk management checklist is a helpful tool in any type of project planning, but can be markedly advantageous for insurance agents who specialize in professional liability insurance coverage.
A risk management plan, at its core, is the identification, prioritization, measurement and mitigation of various risks to an organization. When developing an effective risk management plan, a risk management checklist is incredibly useful to speed up and streamline the process, allowing the agent to more accurately forecast whether or not a specific risk area has the potential to evolve.
A proper risk management checklist essentially serves as a strong foundation for all risk management projects. Below are the components of an effective risk management checklist.
Identification of Risks
The very first step on a risk management checklist should be to identify the risks that need to be controlled. This should include the scenarios, locations and physical items within an organization that could serve as hazards. In professional liability this often means taking a look at past errors or mistakes that a professional has made and examining their processes to identify habits or strategies that could be an professional liability risk.
Classification of Risks
Risks to an organization typically fall into three categories; physical risk, technology risk and human risk. Physical risk can be a very broad category, encompassing any and all safety hazards within an organization. When working in professional liability risk, the focus is primarily on technology risk and human risk - errors or omissions that can lead to financial damages.
Prioritization of Identified Risks
Once potential risks have been identified, they need to be evaluated and prioritized. The risk manager needs to determine how severe each risk is and whether there are already any existing control measures in place that could be effective in minimizing or eliminating them. This information helps in prioritizing the risks in order of urgency.
Beginning with the most urgent risks, start implementing control measures with a focus on eliminating the risk completely. If it’s not possible to eliminate a risk, it should be minimized as much as possible. In some cases, a single control measure may not be as effective as a combination of different control measures that can work together to minimize or eliminate a specific risk. Risk transfer is also a good tool. Risk transfer refers to the unloading of a specific risk onto another party. Professional liability insurance for example, serves as a risk transfer tool for organizations that offer professional advice or services to their clients.
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